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October 18, 2010

To avoid angering the public and their investors, some corporate interests are going to great lengths to hide their political spending. These companies have dumped money into nonprofits and trade associations that often have innocuous names like Americans for Job Security or Revere America, but in reality serve to shield donors from accountability for their spending in our elections. This activity was greatly enhanced by the Supreme Court’s now infamous Citizens United decision, which opened the floodgates for unlimited and anonymous corporate spending in our elections.

Corporations are facing a choice that will have defining consequences for our democracy and will determine their relationships with shareholders, consumers and the public at large. If they believe in accountability to their investors and transparency for their consumers they have a responsibility to be more transparent and accountable about their political spending. From the beginning, the public has been outraged by Citizens United and companies that sought to take advantage of the new rules. When the decision first came down, 80 percent of Americans disapproved of it, according to an ABC/Washington Post poll. The distaste for the ruling cut across partisan lines; 76 percent of Republicans, 85 percent of Democrats and 81 percent of independents disapproved.

Unsurprisingly, when Target became one of the first companies to openly spend its corporate treasury dollars to support a specific candidate they faced a sustained public outcry, calls for change from their shareholders and even consumer boycotts. As a result other companies, recognizing the backlash they would face if caught putting money into 2010 races, have taken their spending underground by funneling contributions through nonprofit organizations (501[c]4s) and trade associations (501[c]6s) that are not required to disclose their donors. In a period of just six weeks, from September 1 to mid October, sixteen groups poured a combined total of over $22 million into federal races. To date, in the election cycle overall outside groups have spent $80 million—five times what they spent in the last midterm elections.

Several of the highest spending groups have already come under scrutiny for their activities. In one of the few examples publicly exposed to date, the New York Times revealed that Bruce Rastetter, CEO of one of the country’s leading ethanol companies, Hawkeye Energy Holdings, is a major funder behind the American Future Fund. The American Future Fund is spending heavily in races where candidates have seats on legislative committees with a direct say on policy affecting the ethanol industry. Another group, Americans for Job Security, may be violating the law to shield their donors from the public. Americans for Job Security was formed as a nonprofit trade association that allows it to keep its donors secret but media and public reports strongly suggest that its aggressive political activities are inconsistent with its tax-exempt status.

Companies do not have to go down this low road. Major financial firms, tech firms and other big-name corporations have embraced or maintained policies against spending in elections, including Morgan Stanley, Microsoft and General Electric. Together, as elected officials and fiduciaries for our two cities, we have joined leaders in Illinois, North Carolina, Pennsylvania and New York State to form the Coalition for Accountability in Political Spending to persuade more corporations to follow their lead. We are committed to working with companies that are willing to do the right thing and holding accountable those that seek to conceal their political activities from investors and the public.

At the end of the day the decision comes down to a few basic questions. When self-proclaimed "issue groups" are spending millions on politics, why won’t they reveal where their money comes from? Why are companies that depend on shareholders and consumers for their viability afraid to disclose whether they are spending corporate treasury dollars in our elections? In the remaining weeks until November 2 this struggle will only intensify. All companies have an opportunity to meet the expectations of their investors and the American people. They should seize the moment before it’s too late.

Public Advocate Bill de Blasio Bill de Blasio is New York City's Public Advocate. For the prior eight years, de Blasio served in the New York City Council where he fought to make City Hall more responsive and accountable to New Yorkers.